Bank of England Interest Rate remains on hold

After a relatively quiet week in terms of data releases for the UK, the markets have been trading quite flat ahead of yesterday’s Interest rate decision. The rate has remained unchanged at 0.5% and the MPC vote was as expected at 7-2 votes. Comments made by the Bank of England were quite dovish, saying that the bank rate is likely to rise, although this will be gradual and limited – something that has been repeated by the Bank members before. GDP is projected to pick up while Inflation is expected to be lower in the short term, so no big surprises came from the results. Governor Mark Carney did, however, leave the door open to future rate hikes saying that the UK could see a further two rate hikes over the next 18 months. The Bank also commented that current outlooks are clouded by Brexit uncertainties after the transition period so nothing is set in stone.

The UK also posted NIESR GDP estimate posted 0.1% from previous 0.2%, not a great result as they were expecting to see 0.3% – an indicator that growth is slowing which is not positive news for the UK. The markets did see the rates jump about following the release but ultimately once markets settled the Pound weakened against both the Euro and Dollar.

The US also published their latest Inflation figure which just missed the mark and held at 2.1% while markets were expecting an increase to 2.2%. Could this result stall the Fed’s decision of a rate hike in June or change the outlook on the current monetary policy? The results indicate that inflation is not rising at the pace analysts thought it would and has put some pressure on the Dollar.

Today, again no data out for the UK and just one major release for the Eurozone at 14:15 when European Central Bank President Mario Draghi speaks. The focus today is on Canada who is due to release Unemployment rate, which is expected to remain the same at 5.8% and Net Change in Employment is expected to drop from 32.3K to 17.4K, both announcements are due at 13:30.

Brexit

The topic of Brexit has begun to creep back into the headlines with custom union talks and Irish border issues yet to be resolved, there is still plenty more uncertainty to come which ultimately will affect the current exchanges rates. If you are concerned, and have Sterling in hand, with an upcoming requirement to buy some Euros, Dollars or any other currency for that matter, give us a call today to speak to one of our friendly brokers to discuss the various option we provide to help you secure your funds and reduce your potential losses should the exchange rates react badly to any Brexit updates.